Vertrauenswürdiges Verhalten

Trustworthy behavior.

The state parliament of Schleswig-Holstein commissioned a study of the legal protections accorded to whistleblowers who are German government employees. It found they have no protections, even when they report crimes.

Although Germany’s laws do end a whistleblowing official’s obligation to maintain secrecy about her job if she sees corruption crimes, they do not end her obligation to trustworthy behavior or her duty to advise and support her superior and to follow the chain of command, wrote Heribert Prantl in the Süddeutsche Zeitung. The study’s authors regretted that the current legal framework pertaining to public whistleblowers is plagued by “uncertainties” and “interpretation problems” and “to the greatest extent unclarified.”

In 2011, a decision by the European Court of Human Rights gave some protection to whistleblowers who are ordinary workers but not public employees.

The parliamentary assembly of the European Council has urgently advised the member states to pass a law protecting informants.

(Fair TROU enz VIRRED igg ess   Fair HAULED en.)

Klassenjustiz

Class-based justice.

On 01 Aug 2014 the Süddeutsche Zeitung’s Klaus Ott reported that it looked like Bernie Ecclestone had successfully negotiated a deal with a Munich court to pay $100 million to make his bribery trial go away.

One indication the court would accept the settlement, the largest ever in Germany, is that after the Friday, 01 Aug 2014, meeting with Mr. Ecclestone the court “uninvited” Tuesday’s witnesses.

If the Munich court accepts the deal, Mr. Ecclestone could continue as boss of Formula One racing. Secrecy was one of the deal’s conditions.

Mr. Ecclestone is on trial for bribing a manager of the Bavarian Landesbank BayernLB with $44 million eight years ago to cheat BayernLB in Mr. Ecclestone’s interest. They used fake invoices and letterbox companies to pay the bribe, and then with the manager’s help Mr. Ecclestone was able to negotiate almost the full bribe out of BayernLB. Mr. Ecclestone’s defense at the Munich trial was that it wasn’t a bribe but blackmail.

(CLOSS en yoos TEETS.)

Schweigegeld oder Schmiergeld?

“Silence money or shmear money”; blackmail or bribery?

How do you show that a quiet illicit payment was corruption and not extortion?

The Bavarian Landesbank BayernLB came into some unexpected Formula One stock (through a series of events after a Deutsche Bank manager said things in a television interview that led to the end of Leo Kirch’s ability to get more loans and the subsequent implosion of the Kirch media empire). One of BayernLB’s managers started asking questions, in Germany and England, to learn about how Formula One was run in order to learn how much his bank’s new stock was worth. He found the racing empire curiously opaque. He found Bernie Ecclestone had a strange veto right, and filed lawsuits to counter it. Then, say prosecutors, Bernie Ecclestone decided to “turn” the diligent bank manager. A 44-million-euro payment was made (disguised as consulting fees and transferred in several installments to accounts in Austria).

The bank manager testified it was a bribe was to obtain BayernLB’s support for the sale of Mr. Kirch’s Formula One shares to a buyer Bernie Ecclestone preferred.

At his trial in Munich, Bernie Ecclestone’s lawyers are saying it was a blackmail payment to buy the bank manager’s silence after he made threats.

(SHVY gah geld   ode ah   SHMEAR geld.)

„Es gibt ein paar tausend Banken in Europa, da kann man nicht alle kennen“

“There’s thousands of banks in Europe and you can’t know all of them”

is how BayernLB supervisory board member and former Bavarian state Economy Minister Erwin Huber (C.S.U.) supposedly explained in his April Fools Day testimony why he gave his approval to purchase the Hypo Alpe Adria yet knew nothing about the Carinthian bank. An S.P.D. politician responded, “Anyone who publicly documents their political inadequacy so authentically is, as the chair of the Economy Committee, a problem.” Mr. Huber has been chairing the Bavarian state parliament’s Economy Committee since October 2013.

Munich prosecutors had said they did not want to prosecute BayernLB’s supervisory board members for approving overpayment of >500 million euros in the purchase deal—plus some bribes that might be easier to prosecute, in separate trials—because the supervisory board was fooled by the dishonest representations of the bank’s management board, the defendants in the current trial. Three high-ranking C.S.U. politicians from the supervisory board have now testified at the management board’s criminal trial and stated that they were satisfied with the information presented to them by the management board in its argument for purchasing the HGAA.

Defendants in the trial of the BayernLB management board include Michael Kemmer, who moved on to become “managing director of the German Bankers’ Association” [Hauptgeschäftsführer des Bankenverbands], “an influential lobbyist.”

At the time BayernLB bought Hypo Alpe Adria, C.S.U. politicians on BayernLB’s supervisory board [Kontrollgremium] such as Bavarian finance minister Kurt Faltlhauser, interior minister Günther Beckstein and economics minister Erwin Huber wanted the Bavarian state bank to expand, into the Balkans. Bavaria’s then-governor Edmund Stoiber (C.S.U.) made a similar statement to journalists while on a visit to Croatia about then, ZDF heute journal reported.

Apparently BayernLB also bought a loss-plagued Hungarian bank that they want to sell.

(Ess   kipped   eye n   pah   t OW! zenned   BONK en   inn   oy ROPE ah,   dah   cannes   mon   nichh t   OLL ah   ken en.)

Vorteil nehmen von rechtsstaatlicher Abwesenheit daheim und rechtsstaatlicher Anwesenheit in London

Benefitting from the absence of rule-of-law in Russia and from the presence of rule-of-law in London.

An argument that Russia’s economic elites’ use of the relative safety of western countries’ financial and legal systems should depend on whether in Russia those people have participated in what would be considered lawbreaking in the western systems.

An interesting pundit said on Australian radio, for example, that money from selling exported Russian oil and gas is often moved through western financial leveraging instruments before being imported into Russia, to make it harder for that cash to be arbitrarily seized there. Even well-connected Russians are just as hostage to Vladimir Putin as the Crimean Tatars.

He said a counterargument holds that oligarchs will learn from living and working in rule-of-law countries and import some of that back to their homeland. Yet with the west’s inadequate oversight members of these groups might likewise grow corruption in their partner countries and firms. It does look as if German power utility companies who worked with post-Soviet Russian partners who demanded bribes in Russia might have started using extralegal shortcuts to achieve their goals at home; at the very least, their German competitor utilities would have had to compete with them while they were using such methods. Corruption really does seem to breed more corruption: apparently after the multinational Siemens developed streamlined procedures for paying bribes in corrupt countries it began offering them in relatively clean countries.

In a worst-case outcome, it would be interesting to see how western jurists would determine culpability in a country without an independent judiciary.

(FORE tile   nay men   fun   rect SHTOTT lichh ah   OB vaze en height   da HIME   oont   rect SHTOTT lichh ah   ON vaze en height   inn   LAWN dawn.)

Kernkraft-Weissblendung

“Nuclear Power Whiteout,” a non-native speaker’s inadequate translation of the title of the bestselling Japanese thriller
Genpatsu Whiteout. It’s a story about a fictional terrorist attack on a nuclear power plant in Japan. The pseudonymous author seemed so well-informed that there was speculation about the area of government in which he or she might have been employed.

Philip Brasor wrote, “Though it sounds like a conventional thriller, the novel’s overarching theme is the government’s determination to resume the nation’s nuclear power network after the Fukushima accident, a mission it carries out so heedlessly that it neglects to enact safety standards that would mitigate the effects of such an attack.”

Apparently the fictional novel also mentions an entrenched system of power companies’ adding 10% over the market value to purchases made for the electricity industry in that country, with some of the extra money being distributed among networks of politicians and their affiliates. And possible post-tsunami attempts in response to the engineering disasters at Fukushima Daiichi to pass legislation that supposedly increased safety, transparency and competition but doesn’t really. Bribe costs ultimately get paid by electricity consumers in their utility bills; reforms that don’t fix the corruption problem might make Japanese voters more amenable to restarting dangerously engineered nuclear power plants if they’re told it will supposedly reduce electricity prices.

(CAIRN croft   VICE blend oong.)

Fliegen und Tiger sind vom Pferde gefallen

“Flies and tigers fell off the horse.”

Both low-ranking and now at least nine high-ranking officials from the government and top executives from the economy have been investigated for corruption in China.

China’s General Secretary Xi Jinping warned in 2012 that corruption “spreads like worms in a cadaver” and that his government was going to go after the tigers in addition to the flies, both low-ranking and high-ranking officials.

In autumn 2013 Spiegel.de reported that corruption cases had been prosecuted against several tigers, including the top overseer of China’s hundred largest companies and former boss of the giant China National Petroleum Company and its subsidiary PetroChina, “the most valuable company in the world after ExxonMobil” (Jiang Jiemin, Sep. 2013), a former deputy C.P. party chief of Szechuan (Lu Chuncheng, Dec. 2012), a manager of the phone company China Mobile (Xu Long, May 2013) and a former railroad minister (Liu Xhijun, Jul. 2013), in addition to Bo Xilai, C.P. party boss of the city-state of Chongqing and former trade minister.
Update on 19 Apr 2014: Song Lin, chief executive officer of the state-owned China Resources Holdings—which owns a large number of companies from different industries, such as energy generation, real estate and retail sales—for laundering money in Hong Kong.
Zhou Yongkang, Politbüro standing committee member, former boss of the giant state-owned China National Petroleum Corporation, then Communist Party chief for the province of Sichuan, then head of China’s security apparatus from 2007 to 2012. Zhou Yongkang is under house arrest, and about 300 people from the oil company, the Sichuan government and the Chinese security apparatus have been arrested in this investigation, with ~$14 billion in property and bank accounts frozen.

Update on 05 Jan 2014: Spiegel.de reported that the Xinhua official press agency announced China investigated nearly 37,000 functionaries for >27,000 cases of corruption between January and November 2013.

(FLEAGUE en   oont   TEAGUE ah   zinned   fom   FEAH dah   geh FALL en.)

Mezhyhirya

The name of Ukrainian President Viktor Janukovytsch’s “residential compound” along the Dnieper river, which apparently features 345 acres of park land, a golf course, fancy buildings, helipads, pet ostriches, a gold-plated “large barge,” other sports facilities, fruit and vegetable greenhouses and serious government security guarding both the property and a nearby village. Mr. Janukovytsch has been accused of illegally privatizing the manse via the two companies that were granted a 49-year lease on the park and have been tearing down Soviet-era C.P. buildings and doing a lot of new construction.

Journalist Tetyana Chernovil climbed the wall and wandered around the inside of the park taking photographs for about three hours in 2012 before getting caught by guards and dogs. She questioned how Mr. Janukoyvch was able to afford what she saw on his annual government salary of about $115,000.

Update on 22 Feb 2014: Unbelievable photos from inside Mezhyhirya after protesters stormed it today, despite warnings of booby traps and sharpshooters. Spiegel.de said Mr. Janukovytsch first built up the park and then privatized it by selling it off to companies based in London and Vienna, companies that he presumably controls.

Innenminister Vitaliy Zakharchenko

Minister of Internal Affairs Vitaliy Yuriyovych Zakharchenko, responsible for security forces in the Ukrainian government headed by President Viktor Janukovytsch (Independent Party) and Prime Minister Mikola Asarow (Party of Regions).

Journalist Tetyana Chernovil wrote about police brutality and corruption among government officials, including Mr. Zakharchenko, questioning among other things where the head of Ukraine’s police forces got the money to pay for his luxurious estate, a “country manor” in the village of Pidhirtsi. “Mr. Zakharchenko is the most senior government official with direct authority over the police units involved in the [violent crackdown on protesters in Maidan square on 30 Nov 2013], and there have been repeated calls by the opposition for his dismissal,” wrote NYTimes.com.

In the middle of the night on Christmas, several men in a black Porsche S.U.V. chased Ms. Chernovil down, rammed her car, pulled her from it and beat her terribly. The Guardian said she was in intensive care where doctors were going to try to rebuild her face. But it’s hard to get it bilateral again after the cheekbones get crunched.

Bloomberg.com said Mr. Zakharchenko has been tasked with investigating this beating that might have been carried out on behalf of Mr. Zakharchenko. On 27 Dec 2013, the FinancialTimes.com reported, Mr. Janukovytsch’s government said Mr. Zakharchenko’s police found “strong” evidence linking protest leaders to the suspects the police were investigating for the crime.

Reibach, Rebbach

Profit.

After international news showed architect’s drawings of the thoughtless shopping center scheduled to replace one of Istanbul’s last green parks, people outside Turkey started wondering how much excess power the country’s developers might be exercising over the country’s democratic processes. And if developers could pull such strings, who else could?

Now a recent kerfuffle has exposed that the state might be one of the developers.

Last week Istanbul police made dawn arrests to bring in for questioning “scores” of people who included three sons of Erdoğan ministers, an Erdoğan-party mayor, three “lions of construction,” “the general manager of Turkey’s largest housing developer, the partly state-owned Emlak Konut GYO” and the boss of a government-owned bank; one of the construction tycoons “recently made headlines with controversial mega-projects and works for the notoriously opaque state housing agency (Toki),” according to the Guardian. At the time of the arrests, the accusations in the air were wild and wonderful: hoarding millions in shoeboxes, bribery, building illegally, illegally converting nature preserves into development land, money laundering, “dubious gold deals with Iran,” reported Süddeutsche.de.

Less than a day later, the heads of five Istanbul police departments involved in the arrests, which Süddeutsche.de described as an “anti-corruption fishing expedition,” had lost their jobs. The decapitated police departments included Financial Crimes, Organized Crime and Smuggling units, and the unsonned cabinet ministers were Interior, Economics and Environment & City Planning, according to the Guardian.

Süddeutsche.de said Gezi Park protesters had always claimed that large construction projects in Istanbul were corrupt and used to make “the big Reibach.” If you had connections to Mr. Erdoğan’s conservative-religious AKP (“Party for Justice and Development”).

The arrests and police firings may have been an outward symptom of a fight for influence between Mr. Erdoğan’s associates and the associates of a Turkish cleric named Fethullah Gülen, “who directs an international religious community from his U.S. exile,” warned Süddeutsche.de. The two religious groups used to “dominate” Mr. Erdoğan’s ruling conservative-religious AK party. Mr. Gülen could help persuade voters, while Mr. Erdoğan could protect Mr. Gülen’s business interests, wrote Spiegel.de, which included media outlets, a bank, schools and training centers that have helped millions of high school students pass college entrance exams (“repetitories” in German, dershane in Turkish). In any case, the increased international attention on Turkish news and better information about Turkish politics and business is welcome.

The strange variety in the accusations against the arrestees might make more sense were they to indicate pieces of networks once used for circumventing the old embargoes against Iran:

“The flight into conspiracy theories doesn’t change the fact that it still must be clarified whether the manager of the state-owned Halkbank helped an Iranian businessman with money laundering, with the sons of the Interior and Economy Ministers allegedly assisting in various ways. Washington [D.C.] people had been taking negative notice for some time of the fact that Turkey was using detour routes to pay for its gas and oil deliveries from Iran ever since sanctions had excluded Teheran from the interbank system. Again and again, couriers with suitcases full of gold were spotted in the Istanbul airport. That’s why it’s remarkable that Ankara people are denying they knew anything about these questionable activities, long ago.” –Süddeutsche.de article

“Suitcases full of gold” must be a metaphor in the Turkish press.

Update on 22 Dec 2013: Mr. Erdoğan has now fired 70 top police and justice officials. He might be not only firing them but having some arrested as well.

FAZ.net concluded its update with an assessment of Mr. Erdoğan’s current situation:

“[Mr.] Erdoğan, who has held this office since March 2003, has taken a hit. Presumably he would still win any election that took place now. But the once-charismatic prime minister has turned into a table-thumping/blustering choleric. For him, democracy means having elections; liberal values such as protecting minorities are not part of his idea of democracy. More and more people are objecting to the fact that [Mr.] Erdoğan is acting as the nation’s morals police, who wants to tell people what to eat and how many children to have. He’s lost from view the fact that the AKP, which has been ruling without a coalition partner since 2002, owes its rise among other things to the image of being a ‘clean party.’ The kemalist parties that ruled Turkey until 2002 were voted out of office for, among other things, corrupt business practices that drove Turkey to the edge of bankruptcy in 2001. In recent years, corruption around [Mr.] Erdoğan has begun spreading like a cancer again. The Gülen movement is ‘clean’ though, says [Mr.] Arinc. The Erdoğan vs. Gülen war will continue.”

Update on 24 Dec 2013: Spiegel.de wrote that Mr. Erdoğan has threatened to break the hands of troublemakers and that more journalists were imprisoned in Turkey than in any other country.

Update on 07 Jan 2013: Last night Mr. Erdoğan fired hundreds of police, 350 in Ankara alone, according to the Dogan press agency and CNN Turk, said Süddeutsche.de. Those relieved of their duties included police officers and 80 higher-ranked officials in the divisions of Financial Crimes, Organized Crime and the anti-smuggling authority.

Update on 08 Jan 2013: Mr. Erdoğan removed from their posts Turkey’s deputy police chief and the police chiefs of 15 provinces, including the capital city of Ankara. On Tuesday night his party submitted draft legislation to give the government more power in naming judges and prosecutors. The E.U. commission is concerned, the Financial Times said, “that government moves to remove, reassign and fire police officers and investigators ‘could undermine the current investigations and capacity of the judiciary and the police to investigate matters in an independent manner'” in Turkey.

(RYE bochh,   rebb ochh.)

Kali-Kartell

“Potassium cartel.”

Update on 05 Aug 2013: Supposedly ~70% of the world potassium trade has been controlled by two export alliances, BPC in Russia and Canpotex in North America. The world price for potassium was kept at a “comfortable” ~$400/ton. Last summer a Russian potassium company, Uralkali, made a surprise exit from the BPC export alliance (BPC stands for Belarus Potash Company), and the potassium price then fell to ~$300/ton. The stock price of e.g. the K+S potassium and salts company in northern Hesse fell precipitously as well.

Update on 24 Oct 2013: Spiegel.de posted an amazing potassium follow-up: “A kingdom for a cartel. Lukaschenko’s battle with the oligarch.” After the Russian firm Uralkali abruptly ended their BPC cooperation with the Belarussian firm Belaruskali last summer, Belarussian Prime Minister Lukaschenko had Uralkali’s C.E.O., Wladislaw Baumgertner, arrested in Minsk, where he is still held by authorities though he was moved to house arrest in late September.

Since the split it’s been shown how dependent the White Russian state company was on its Russian partners: exports to India and China were considerable but have nearly ended because, White Russian sources said, Belaruskali’s sales personnel don’t have the English to keep their Indian and Chinese deliveries on Russian trains running? In addition to its dependence on Russian trains, White Russia remains dependent on Russian oil and gas. White Russian potassium mines have been experiencing temporary closures since the cartel ended. As the company’s revenues fall so do the state’s; Mr. Lukaschenko had been using the potassium company’s money to fill the government’s budget gaps.

Spiegel.de wrote that Uralkali and Belaruskali started working together in 2005 to help keep international potassium prices high, together controlling ~40% of the world market in 2012 for potassium salts, which are used to make artificial fertilizers. World potassium prices had peaks of as much as $900/ton, yet White Russia is now forced to try to attract nearby customers in Russia with prices around $140/ton, forcing the Russian competitor Uralkali to counteroffer $160/ton for domestic customers.

More historical background provided in the article: Uralkali is controlled by major shareholder Suleiman Kerimow (worth >$7 billion) who bought his interest from another oligarch in 2010. He was also interested in acquiring Belaruskali from Mr. Lukaschenko, who not only did not sell but announced that Mr. Kerimow had offered a purchase price of $10 billion to the government plus an additional $5-billion bribe to Mr. Lukaschenko. When the purchase offer was made is unclear from the Spiegel.de article but the nature of the gossip flying indicates it was before the BPC alliance ended.

(CAWL ee   cawt ELL.)

“Gerüchte verbreitend”

“Rumormongering,” for which Chinese bloggers are being sent to prison in new ways. China’s new internet rules permit the arrest of people who use blogs or Weibo microblogging (Twitter has been blocked in China) to e.g. comment on the obvious and deadly air pollution or support Bürger-Bewegungen, burgher movements, such as the one that dared to demand party functionaries publish how rich they are.

Tagesschau.de reporter Christine Adelhardt said,

“What’s a rumor is of course defined by the Party. And thus the new rules are becoming a free pass to gag critics. The Communist Party is worried about its opinion superiority [Meinungshoheit] in the internet and its power monopoly in the country.”

Her report is so well-written that it’s difficult-in-a-good-way to translate:

Was ein Gerücht ist, das bestimmt selbstverständlich die Partei. So werden die neuen Regeln zu einem Freibrief1, um Kritiker mundtot2 zu machen. Die Kommunistische Partei furchtet um ihre Meinungshoheit3 im Netz und ihre Machtmonopol im Land.”

(Geh R-R-R-Ü chh teh   furb RYE tend. )

1  Charter, get-out-of-jail-free card, free pass, but not a letter of marque which is a Kaperbrief or ship-capturing permit

2  “Mouth-dead”; gagged, muzzled

3  Opinion superiority, high ground that allows those controlling it to be the ones who define opinion

“Reich der verdeckten Parteispenden”

“Empire of hidden donations to political parties.”

Austria continues to have fascinating scandals. This Süddeutsche.de article based on News.at reporting and dated a month before their recent parliamentary election describes some salacious-sounding goings-on. Investigations into corruption in “the” phone company Telekom Austria for “stock price manipulation, questionable Eastern European dealings and alleged law buying” has turfed up unreported donations to both the conservative party Ö.V.P. and the social democrats S.P.Ö. The Ö.V.P. and S.P.Ö. have been in a grosse Koalition for the past few national governments and are about to form a new grosse Koalition, though with the weakest results so far.

The unreported political donations came from: Telekom Austria, Österreichische Lotterien [“Austrian Lotteries”], Raiffeisen bank, the Austrian post office corporation [Österreichische Post AG], P.S.K. bank and the Industriellenvereinigung [“Federation of Austrian Industry,” abbr. IV; Wikipedia says this is the Austrian employers’ lobbying organization]. There appears to be a Jack Abramoff king-lobbyist character involved: Peter Hochegger, his company Valora AG, and an agency Mediaselect to which they transferred funds. Peter Hochegger has been under investigation for scandals from the time when the ex-Haider F.P.Ö. was in a ruling national coalition with the conservative Christian Ö.V.P.

In the 29 Sep 2013 Austrian parliamentary election, the two biggest parties barely got enough votes to form another grosse Koalition (the last one, journalists speculated). The racist ex-Haider F.P.Ö. came in third. Other small parties also did well, in an indication of voter frustration: Austrian Green party ~10%, the weird new party of a Canadian-Austrian billionaire ~5%, and the new party of “young neoliberals” ~5% (though if it’s like the German neoliberal party F.D.P. appears to be, this group will front with young politicians—rapid risers with amazing management skills!—while old men quietly run the show, selling a network disguised as a reservoir of superior business knowledge).

(R-r-rye chh   dare   fair DECK ten   pah TIE shpen den.)

Rüstungsfirmen wegen mutmasslichen Schmiergelder untersucht

“Razzias Searched Weapons Manufacturers for Evidence in Bribe Accusations.” Bremen prosecutors confirmed police had searched the offices of two German arms manufacturers on 23 Aug 2013 for evidence in corruption charges brought against the firms. Rheinmetall Defence Electronics and Atlas Elektronik are being investigated for paying bribes to Greek politicians and bureaucrats and for not paying taxes in sales of German submarine equipment to Greece.

Süddeutsche.de said it’s thought each firm paid Greek officials about 9 million euros in bribes or “Schmiergeld,” shmear money, lubrication funding.  The bribery charges go back a long way in time, in Atlas Elektronik’s case to before the current owners’ purchase of the firm. Payments were made to a British “letterbox” company that belonged to a Greek company.

Despite the British background in this investigation, there’s a long history of corruption in German submarine sales to Greece according to Süddeutsche.de. Munich prosecutors have been investigating it for years because an Essen company Ferrostaal caught paying bribes to Athens used to be owned by MAN SE, a transport vehicles manufacturing company based in Munich. Most of the extra Ferrostaal submarines sold to Greece via the shmear were built at ThyssenKrupp shipyards, and Bremen prosecutors say Ferrostaal involvement hasn’t been ruled out yet in the current investigation of Rheinmetall and Atlas.

Prosecutors of multiple German districts have known about these problems for years but reportedly only found enough evidence to take action in 2012. For example, the Süddeutsche wrote that EADS (now Airbus) and ThyssenKrupp are joint owners of naval electronics specialist Atlas Elektronik. After buying the company in 2006 from the British firm BAE, they stopped payment of the bribes in 2007, bribes that had apparently started with a consultant contract in 2002. Atlas informed prosecutors about it in 2010 but nothing happened until further info was received from a 2012 tax audit at Rheinmetall Defence Electronics, they said. Rheinmetall denies all bribery charges.

(RISS toongs firm men   vay gen   moot MOSS lichh en   SHMEAR geld ah   oont ah ZOOCHHT.)

Den Anschein der Käuflichkeit erweckte

“Awoke the appearance of purchasability.”

What Germany’s penultimate Bundespräsident, Christian Wulff (C.D.U.), is on trial for in Hanover, to determine whether he did this by accepting ~700 euros in gifts from someone in the film industry during a weekend at the big Munich Oktoberfest in 2008 while Mr. Wulff was still governor of Lower Saxony. It was because of corruption charges from his days as governor that Mr. Wulff was forced to resign from office as president of Germany.

Germany’s president is supposed to be apolitical, party-neutral. They give speeches, judging and encouraging people in Germany and abroad. They attend funerals. If Germany were the U.S.A. the Bundespräsident might also take over some of the permanent fundraising work that can keep a leader from governing, but perhaps the proceeds would have to go to all (both) parties to preserve neutrality.

Great Bundespräsidents include Richard von Weiszacker and apparently Joachim Gauck.

There is only one Bundespräsident jokes are still told about: Heinrich Lübke. Famous Lübke quotes include, on a trip to Africa, “Ladies and gentlemen, and dear Negroes, …”

(Dane   ON shine   dare   COY flichh kite   ehh VECK teh.)

Anklagebehörde

“Prosecuting authority,” prosecutors’ office.

The Bavarian state bank BayernLB (Bayerische Landesbank), owned by the state of Bavaria and the Sparkasse banks (the largest German public bank), bought the Austrian bank HypoGroup Alpe Adria in 2007 and lost billions of euros as a result. On 07 Aug 2013 the Munich regional court Münchener Landgericht I announced it would not permit prosecution of charges brought against the entire Landesbank’s management board [Vorstand] while criticizing that charges hadn’t been brought against members of the higher-level overseeing “administrative board” [Verwaltungsrat], which gave permission for the sale. The supervisory Verwaltungsrat contained important C.S.U. politicians who might have been thus being protected by Bavarian prosecutors, the Bavarian judges imputed. Bavarian opposition parties S.P.D. and Freie Wähler [Free Voters] had filed complaints against BayernLB Verwaltungsrat members and state ministers Erwin Huber, Günther Beckstein and Kurt Faltlhauser plus some less important C.S.U. politicians for breach of trust of bank assets [“Veruntreuung von Bankvermögen”] in the Austrian acquisition, according to Süddeutsche.de and tagesschau.de.

BayernLB’s management board allegedly cited a falsely inflated purchase price to the supervisory administrative board, so theoretically criminal charges should be brought against management board members, according to tagesschau.de. But the Munich Landgericht I court denied prosecution of that on 07 Aug 2013, citing the latitude enjoyed by managers in negotiating sales. This allegedly angered Bavarian state prosecutors. Also angered by accusations they’d protected C.S.U. politicians by not bringing charges against members of the higher-level Verwaltungsrat [administrative board] supposed to monitor or do “controlling” of BayernLB’s management board, Bavarian state prosecutors responded that the management board members had failed to adequately inform the higher-level administrative board; indeed the supervisory Verwaltungsrat was deliberately defrauded with malice aforethought (“vorsätzlich arglistig getäuscht”) by members of the BayernLB management board, in the opinion of the prosecutors. The supervisory administrative board that okayed the deal consisted of people from the Bavarian state government (ruled by the C.S.U. since 1946) headed by Edmund Stoiber and people from the Sparkasse banks.

The German bank manager Bernie Ecclestone was accused of paying a bribe to was a member of BayernLB’s management board [Vorstand], not supervisory board [Verwaltungsrat].

In its 07 Aug 2013 announcement in the ongoing discussion about whom to prosecute at BayernLB, the Munich Landgericht noted that this sale of banks between state governments was partially a political act. But because no one could have foreseen events, the Munich Landgericht was only going to look into the BayernLB management board’s criminal culpability in overpayment of an additional 75 million euros lost by subsequently purchasing additional shares, and not into the BayernLB management board’s overpayment of 550 million euros in the 1.7-billion-euro deal as the prosecutors originally proposed.

Prosecutors filed a complaint about the Landgericht’s decision not to allow a criminal trial against the BayernLB management board for the lost half billion; the Munich higher regional court [Oberlandesgericht] “will now have to decide the dispute taking place in its own house.”

Before Bavaria bought it, according to the Guardian.co.uk, the Carinthian state government-owned Hypo Alpe Adria “acted as financier” for the horrifying Jörg Haider, charismatic leader of a terrifying populist racist Austrian political party that promoted hatreds in order to surf them to power. WienerTageszeitung.at wrote that HGAA had had to help support Haider’s Carinthian state government’s “patronage policies” [“gönnerhafte Politik”]. The recent Munich Landgericht I court decision about how to prosecute the Bavarian side did allow prosecution of an accusation that Jörg Haider, Kärntner Landeshauptmann [“Captain of Carinthia”] at the time of the sale, received a soccer stadium sponsorship bribe from BayernLB (2.5 million euros). An Austrian website also talked about overpayment for the expert opinion of an Austrian tax adviser associated with Haider as another possible bribe to him from the deal (6 million euros for six pages). No details found yet about money improperly funneled to Haider & Co. before the sale, when his party controlled the government that owned the bank.

According to the Manager-Magazin.de article, a 2007 audit by the Österreichische Nationalbank [Austrian National Bank] reported that Hypo Alpe Adria was shuffling fake capital around as early as spring 2006 to hide its losses, through obscurant Liechtenstein entities, and selling stock to itself to create the illusion of solvency. There was no Austrian regulatory follow-up on the audit report apparently.

BayernLB’s purchase of HGAA has already sparked multiple trials, with more to come. For example, Manager-Magazin.de wrote that Munich prosecutors initiated a criminal trial against BayernLB management board members on 05 May 2011—that trial hasn’t started yet—and BayernLB sued its former management board members for 200 million euros in damages in a civil trial that actually did start, on 19 Jun 2012. An Austrian criminal trial sentenced a Carinthian state party chief to five years in prison on 10 Oct 2012 for diverting money from the sale to his political party (a state government coalition partner with Jörg Haider’s FPÖ). The current head of the Bavarian C.S.U. party, Horst Seehofer, is to testify in Vienna before a commercial court [Handelsgericht Wien] about the schlamassel. When they gave Hypo Alpe Adria back to the country of Austria, did BayernLB sign a paper saying they would not sue for damages? The Vienna trial is about 3 billion euros of Bavarian taxpayer money that now-nationalized Hypo Alpe Adria does not want to return; this would be in addition to the 3.7 billion euros Bavaria already spent to bail out the bank.

Update on 24 Oct 2013: Bavarian prosecutors won their appeal! The Munich Oberlandesgericht overturned the Munich Landgericht’s decision and will be allowing full prosecution of ex-C.E.O. Werner Schmidt and six of the seven members of the BayernLB management board on the counts sought, for breach-of-trust losses of 550 million euros in the 2007 purchase of Hypo Alpe Adria in addition to the 75 million lost on extra HGAA stock bought after the purchase.

Update on 27 Feb 2014: Three former management board members of Hypo Alpe Adria were given prison sentences by an Austrian court for granting investors buy-back guarantees and thus, the court said, costing the bank several million euros. The Klagenfurt court [Schöffensenat] said they held back important information when they sold Hypo Alpe Adria to Bavarian state bank BayernLB. A 2.5-million-euro dividend they issued was also not in order, the court said.

In this breach of trust trial, former management board member Josef Kircher was sentenced to three years, some of which was changed to probation because he was willing to testify. Former management board member Siegfried Grigg was sentenced to three and a half years. The Flick Foundation was fined 600,000 euros. Former H.A.A. C.E.O. Wolfgang Kulterer was sentenced to one year. He has already been sentenced to several years in a related Hypo Alpe Adria matter in January 2014, when he admitted having kept mumm about side agreements. Former Hypo manager Tilo Berlin is also a defendent in the breach of trust trial but was unable to appear for health reasons, delaying resolution.

(ON clog ah beh HEARD ah.)

Abgucken

“Looking off.” Looking at something and then copying it. Rome for example spent centuries inadvertently serving as a model to the tribes outside its borders, while trying to deal with them by alternately fighting them, bribing them and training them as mercenaries. Eventually some surrounding tribes that were feindlich gesinnt learned enough, formed large enough groups and took over the old empire.

(OB cook en.)

Schneeballsystem

“Snowball system,” the house-of-cards finance company operated from 2006 until its collapse in 2011 by a guy now awaiting trial in the USA which ate $117 million of one Venezuelan businessman’s money and the at least $500-million pension fund, for 25,000 workers, of the Venezuelan state oil company PdVSA. Reporting the story on 04 Apr 2013, the ICIJ wrote that the financier appeared to have started the pyramid scheme after suffering a $5 million loss in 2005.

A bankruptcy administrator (Konkursverwalter) or receiver appointed by a US federal court said inter alia that a very well-connected Caracas stockbroker apparently got fees as high as $10 million per transaction for diverting large amounts of money into the pyramid scheme to keep it going, and an investments and insurance manager at the oil company collected $37.5 million for sending PdVSA pension money to Connecticut. The receiver has recovered $230 million from a bank in the Netherlands and is still hunting for the rest, writes the ICIJ. When the SEC started investigating in 2010, they discovered “intricate financial transactions and virtually zero bookkeeping.”

(SHNAY boll zyss dem.)

Schienenkartell

“Rails cartel.” Troubled steel giant Thyssen-Krupp and three other firms are defendants in a lawsuit by the Deutsche Bahn for railroad construction price-setting collusion said to have lasted almost a decade. Deutsche Bahn (German Rail) is seeking 550 million euros after, it said, trying for several months to reach an out-of-court settlement. Its lawsuit is said to have good chances, in particular because somehow the suit suspends the statute of limitations for the offenses, for which these companies were fined ˜100 million euros last summer by the German Federal Cartel Authority (Bundeskartellamt), which criticized the Deutsche Bahn’s lax procedures. Tagesschau.de reports that the Deutsche Bahn has often been the victim of rail cartels. The F.A.Z. called them “nearly a historical normality.” In 2012 Thyssen-Krupp announced losses of 5 billion euros after failures of e.g. investments in steel processing plants in the USA and Brazil; it fired half its board in consequence.

Update on 23 Jul 2013: The Bundeskartellamt announced it has issued a second set of fines in this matter totalling ˜97 million euros to eight companies, moving its fines total for this rail cartel to ~230 million euros. This second set of fines was for overcharging construction firms and local, regional, private and industry train organizations. F.A.Z. reported the fine money will go to the federal government. Almost all the companies are cooperating, according to the cartel authority. The investigation was started by a request to turn state’s evidence from the Austrian Voestalpine company, which also said recently that it is the only one of these companies to have reached a negotiated settlement with the Deutsche Bahn so far. This second set of BKA fines is not yet final; they may still be appealed.

The Bundeskartellamt’s press release said in the cartel the company scheduled to win each order was given a “leadership” role that included telling the others how much to ask for in their so-called “safety bids” [“Schutzangebote“] tendered to camouflage the collusion.

(SHEE nen cartel.)

Unterstützungsanzahlung

“Support  payment,” “support installment payment.” At least two “high animals” at FIFA received bribe payments totalling 11 million euros, part of a bribe of 100 million euros given to FIFA by a media company in the 1990’s. Sepp Blatter knew about it. At the time, this was not illegal in Switzerland, but it is illegal now. The two known officials (a guy and his son-in-law) were prosecuted and found technically innocent. FIFA then made a seven-figure “support payment” “to keep the files in the prosecution’s filing cabinet,” which is why we’re only finding out about this now, thanks to journalist Jean François Tanda’s successful lawsuit to obtain access to the court files.

(Oon ter sh TOOTS oongs on tsoll oong.)

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